Any advice given the mortgage system seems to have gone mad

sah705

Evening all,

I wonder if anyone can offer advice on the below -

We are looking to finance an extension on our house by releasing equity.

Current outstanding mortgage amount is around 77% LTV. I know my current value as I paid for a house valuation report by a RICS certified professional before I started looking into the work and they provided a before and after value.

I have had a quote from a builder so also know the costing for the work we are looking to complete. To take the additional amount it will mean LTV going to around 93% of current value, which equates to approx 85% LTV of predicted value in the home valuation report once the work is completed.

Whilst mortgage companies will offer a 95% mortgages that is for existing mortgages/ new purchases and as I am looking to do home improvements will only go to 80% LTV.

Oh and can't borrow the money from family to do the work first and then remortgage/borrow as this in debt consolidation with a max 75% LTV

No issues from a affordability perspective 1 company who couldn't lend for the extension due to the 80% will offer me a mortgage at double to size if I want to move house.

The whole world has gone mad. Any help much appreciated.

Thanks

Steve

ACG

Speak to other lenders or a broker, it can probably be done assuming everything else stacks up.

Thrugelmir

Any future value of the property when the work is completed is subjective. In the interim overpay your existing mortgage by as much as you able to build further equity.

minimike2

How does this equate to the world going mad?

sah705

I fail to see the logic in someone being able to mortgage to 95% LTV if they were buying my house, however as the current owner I can't borrow to the same LTV % against the same current state and value to extend and improve it.

I must be missing something

ACG

When lenders do their affodability assessments they do it based on your income supporting the Mortgage at a rate of around 6-8%. If your income does not support it then they will not lend.

amnblog

You cannot provide a house with an extension as security as that property does not yet exist.

sah705

Maybe this is where I am missing something.

I am looking to borrow to around 93% LTV based on the current value of the property.

I fully understand that I can't borrow against the predicted value as this is unknown and purely subjective.

ACG

But WHEN rates rise, the lender thinks you will be unable to afford it. Stop looking at the initial rate, its only going to last for a couple of years.

sah705

There has been no indication from lenders that there will be and affordability issue now or when rates rise.

The issue I seem to be hitting it around loan to value for home improvements compared to a standard remortgage or house purchase

MortgageMamma

Not knowing the ins and outs of your personal circumstances this is purely just an idea.

Have you considered some form of second charge lending perhaps a secured loan or bridging finance? Not overly sure about the latter as I've only ever done bridging for buy to let investment properties. But it could be worth a punt.

I think it would be very unlikely you would get over 90% ltv with a first charge mortgage lender.